The federal agency says NAR cannot use a 2008 consent decree to protect itself from an investigation into its rules.
Just over a month after the US Department of Justice withdrew a proposed settlement with the National Association of Realtors to expand its investigation into the trading group’s rules, the agency intervened in a federal antitrust lawsuit against the trading group, led by discount broker REX. Real estate was submitted.
REX sued NAR and Zillow in March for alleged antitrust violations of a NAR rule known as the no-commingling rule.
In their July dismissal motions, NAR and Zillow defended REX’s claims that it was the target of an illegal boycott. One of the arguments put forward by NAR was that a 2008 consent decree by the DOJ allowed broker-affiliated services for multiple listings to require that MLS listings be searched separately from listings from other sources.
But on Tuesday, DOJ lawyers tabled a declaration of interest in the case “to prevent unjustified conclusions from being drawn from a 2008 consent decree that has now expired” between the DOJ and NAR.
“By claiming that the government ‘approved’ the search policy annexed to the Consent Decree of 2008, the NAR is implying that the government has determined that the policy – and hence the no-commingling rule – complies with antitrust laws is. ”The lawyers for the DOJ wrote.
“However, this implication is wrong. The 2008 Consent Decree resolved the United States’ antitrust claims against NAR for certain exclusion policies for brokers using innovative online platforms. In this case, the United States has not reviewed the rest of NAR’s guidelines, including the no-commingling rule, and so those guidelines simply have not been antitrust reviewed. “
“The 2008 decree did not affirmatively identify the policy under appeal (or any other NAR policy listed in the annex to the decree) as pro-competitive or lawful,” they added.
In addition, the DOJ stressed that the decree was no longer in force.
“The decree expired in 2018 and shouldn’t be read for industry developments like the massive growth of Zillow into an allegedly critical platform for marketing homes directly to consumers (as opposed to a multiple listing service) that barely existed in 2008.” . “
Even if the decree were still in force, the DOJ pointed out that it contained a provision that specifically stated that the agreement had “the right of the United States to investigate and take action to investigate violations of antitrust laws.” Prevent or restrict “, would not restrict” a rule or practices adopted or enforced by NAR or any of its boards of directors, and therefore NAR cannot use the decree to “protect” itself from future investigation or contestation.
The DOJ noted that NAR had also attempted to use the 2008 consent decree “to screen behavior that the government has not investigated or challenged in the 2005 case that led to the decree” in two pending Commission proceedings against NAR, known as Möhrl and Sitzer after their main plaintiff.
Similarly, in expressions of interest filed in October 2019, the DOJ alleged that NAR had inaccurately outlined the 2008 Settlement Agreement in these lawsuits and that that agreement was only the DOJ’s antitrust claims against NAR “because of its exclusive policy on brokers aim to use the innovative platforms’ contested and fail to adhere to any other NAR guidelines.
According to the DOJ, the courts in the Möhrl and Sitzer cases “rightly rejected any conclusion in favor of the NAR from the 2008 Consent Decree” and asked the court in the REX case to do the same.
In a statement emailed to NAR, Mantill Williams, vice president of communications for NAR, told Inman, “NAR firmly believes that we have always accurately described the implications of the consent decree we approved with the DOJ in 2008. NAR continues to believe the lawsuit is unfounded and remains confident that our rules and guidelines promote a consumer-friendly, competitive marketplace for home buyers and sellers. “
The DOJ’s Expression of Interest states that the Agency “does not comment on any other issue in the case” and therefore the Agency’s view on the settlement at issue in this case is unknown. However, the filing comes at a time when federal regulators, through appointments with the Federal Trade Commission and through an executive order encouraging the FTC to exercise their rulemaking power “in areas such as … unfair professional license restrictions; unfair retention or exclusive practices in brokering or listing real estate; and all other unfair industry-specific practices that significantly impede competition. “
In a press release, REX CEO and co-founder Jack Ryan praised the DOJ’s approach.
“The real estate cartel’s house of cards is about to collapse,” he said. “We have been contesting the agreements between Big Tech and big industry in court since March. We applaud the decision by the Biden government to intervene on behalf of consumers who will continue to focus the government’s magnifying glass on the archaic anti-competitive systems of the national real estate cartel. “
Zillow declined to comment on the story.
Email to Andrea V. Brambila.
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